Indonesian Payment Challenges 2015

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13-14 AUGUST 2015 | LE MÉRIDIEN JAKARTA
Follow @PaymentsAsia
THE CHALLENGE IN
INDONESIAN PAYMENT
CHANNELS AND HOW
YOU CAN SOLVE IT
- PART 2

Part 2 will discuss:
• ecommerce sites that are already
making money
• why Indonesian customers hesitate
about paying online?
• what solutions that ecommerce
businesses can employ to overcome this
• actionable insights going forward
(Source: SP eCommerce/Bank Mandiri
Indonesia Economy Update 2015/KPMG
Mobile Payments)

In 2013, Amazon was the most popular B2C site
in Indonesia. Despite having no local presence,
pricing or logistics support, their breadth of
products drew the highest amount of visitors.

Lazada Indonesia, Rocket Internet’s answer to Amazon,
made the jump to the top spot in 2014. This comes after their
rebranding in 2014 that showed a shift of focus away from
consumer electronics to a larger range of lifestyle products.

Lazada is also better at serving the local
market with native language marketing
campaigns, same day delivery and a variety
of custom payment revenue.

Zalora, Rocket Internet’s fashion venture, is another big
player in the local market. Operating in ten countries
throughout Asia Paciﬁc, their Indonesian store accounts
for the largest share of revenue across the group.

Tapping on the potential of Indonesia, Japan also entered the market
with Rakuten Belanja Online, a standalone subsidiary of the Japanese
giant Rakuten operating locally. In a culture with such distinct
characteristics and low levels of risk-taking, a localized strategy such
as adding an Indonesian word Belanja (which means expenditure) to
a company name increases approachability and trust.

Kaskus is the leader of online forums in Indonesia. As of May
2014, it reported to have over 6.8 million registered users that
create 4,000 new threads every day. The site also sees more than
750 million page views and 25 million unique visitors every
month. A visitor typically spends about 29 minutes on the site
every day.

Kaskus’s biggest competitor is OLX,
formerly known as TokoBagus. It is the
largest eCommerce platform and
Indonesia’s third largest local website.

Of special mention is the consumer-to-consumer (C2C) marketplace
Tokopedia. Claiming to be the biggest eCommerce site in Indonesia,
they are drawing ten million monthly visitors with shoppers buying
a total average of two million products a month in 2014. From the
businesses already present, it is clear there is a local audience ready
for eCommerce, even if it is still in the early stages of development.

JOIN THE DISCUSSION
Former Yahoo!
Indonesia CEO and MNC
media network People
Leader, Roy
Simangunsong chairs a
session on “What’s the
Future of Retail
Payments? 1440H, 13
August 2015 at PSRA
2015, Le Méridien
Jakarta. 13-14 AUGUST 2015 | LE MÉRIDIEN JAKARTA

ONLINE PAYMENTS
Online payments in Indonesia are low,
with credit card penetration at only
4.5%.
Businesses must therefore present
themselves as being reliable and
trusted online retailers by
prioritizing data and payment
security.

CUSTOMER HESITANT
ABOUT ONLINE PAYMENTS

Challenge for Brands
Online payments in Indonesia are low,
with credit card penetration at only
4.5%.
Businesses must therefore present
themselves as being reliable and
trusted online retailers by
prioritizing data and payment
security.

Indonesians most risk
averse in ASEAN
Compared across the Southeast
Asian region, Indonesians are
the least likely to make an
online purchase due to their
risk averse nature.

Just for RESEARCH
Indonesians tend to use the
internet mainly for research -
80% go online for price
comparisons before buying
in-store, compared to the
regional average of
60%.

FEAR of FRAUD
A 2013 Nielsen survey
revealed that the biggest
obstacle to eCommerce was
the customers’ fear of fraud,
with 34.6% of customers
citing this as a reason for not
making an online purchase.

Credit Card Info is a
prized possession
According to the survey, six out of ten
consumers said they were unwilling to
provide credit cards details online.
Another study by Google in 2013 revealed
that customers’ lack of trust in credit card
security on mobile devices was the top
reason for not purchasing online via their
smartphones.

A TIP FOR ECOMMERCE
ENTRANTS: HAVE A SECURE
PAYMENTS CHANNEL
Data and payment security
is therefore a key
consideration for businesses
to present themselves as
being reliable and trusted
online retailers.

Register at payments@arcmediaglobal.com!
MEET
INDONESIA’S
PAYMENTS
ECOSYTEM

the challenge of selling
online in indonesia
21.5% of consumers were
not comfortable making a
purchase before they could
touch and feel the quality of
the items they were buying.

ORDER ONLINE THEN CALL
TO VERIFY
While the average European fashion
website receives customer queries on only
5% of orders, Zalora in Indonesia receives
an average of one phone call or message
per order from concerned customers to
conﬁrm if their request has been received,
a strong indicator of customers’ concerns
with online shopping.

Need for More Widely
Accepted Payment
Methods

THE CHALLENGE ON
PAYMENT COLLECTIONS
Given Indonesians’ preference for
traditional payment methods, such
as Cash on Delivery, eCommerce
businesses entering Indonesia may
ﬁnd payment collections
challenging, especially if they are
used to online payment systems.

PIN IS MIGHTIER THAN
THE PEN.
Many newer forms of payment such as internet
banking are not widely used and customers
typically choose to make payments directly
through an ATM to a retailer’s account.
This also results in consumers often deciding to
simply walk into a brick-and-mortar store and
buy a product immediately, instead of making
the ﬁnal purchase online through a credit card.

BREAKDOWN OF PAYMENT
METHODS IN INDONESIA

PAYMENT INNOVATION
HOLDS THE KEY.
With Indonesia’s eCommerce
sector having a low uptake of
credit cards, local eCommerce
players have developed unique
payments solutions.

not cool to only have
one payment channel.
Travel website Tiket.com offers
14 different methods to make a
payment, more than any other
online store in Indonesia.

ecosystem specific
payments
Kaskus took it a step
further, by creating their
own payment system for
their C2C marketplace.

behold free delivery
Other sites such as Bhinneka use free
delivery within Jakarta to encourage
customers to make online transactions.
Theses increased payment options have
also increased the growth of Indonesia’s
eCommerce ecosystem as a whole.

Need for Sophisticated
Logistics Solutions for
eCommerce Businesses

CAN YOU CONNECT over
17000 islands?
Indonesia’s infrastructure is a
challenge to both businesses
and customers alike. Rapid
urbanization has resulted in
increased trafﬁc congestion,
driving people to shop online.

WANTED: RELIABLE SUPPLY
CHAIN PARTNER
This growing demand for more sophisticated logistics
solutions for eCommerce businesses will lead to
further investments of global and regional logistics
players in the country.
An example of such an investment is the agreement
between Singapore Post and Pos Indonesia, who have
come together to improve the distribution and
delivery of international postal items so as to cater to
the growth in eCommerce trafﬁc and strengthen the
regional eCommerce logistics network.

WANTED: RELIABLE SUPPLY
CHAIN PARTNER
With this increase in online
shoppers, eCommerce businesses
need to work closely with an
experienced and reliable logistics
and supply chain partner to
ensure timely delivery of goods to
their end customers.

MEET INDONESIA’S
RETAIL BANKING
MOGULS

Indonesian Payment Challenges 2015

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